Washington D.C. Physician Non-Competition Agreements
In the District of Columbia, non-competition agreements must be as narrowly drafted as possible to protect an employer’s legitimate business interests. Non-competition agreements are strictly construed against employers. If an agreement is overly broad or vague, a court may deem the agreement to be unenforceable.
District of Columbia courts have determined that non-competition agreements are enforceable when the terms are reasonable and necessary to protect an employer’s business interests. Important employer business interests entitled to protection include customer relationships and trade secrets.
A promise to refrain from competition is unreasonably in restraint of trade if: (a) the restraint is greater than necessary to protect the employer’s legitimate interest, or (b) the employer’s need is outweighed by the hardship to the promisor and the likely injury to the public. “A promise is unenforceable on grounds of public policy if it is unreasonably in restraint of trade. A promise is in restraint of trade if its performance would limit competition in any business or restrict the promisor in the exercise of a gainful occupation. A promise to refrain from competition that imposes a restraint that is not ancillary to an otherwise valid transaction or relationship is unreasonably in restraint of trade.” A restriction that is limited in time and space is more likely to be enforceable. Further, the restraint must be reasonable, no greater than necessary to protect the employer’s business interest, and after a party has deliberately made his contract and received consideration for it, the restraint must plainly appear to contravene public policy before a court will declare the restraint to be void. Factors considered when determining reasonableness include the nature of the employer’s business, the character of the service performed by the employee, and the employee’s relation to the area encompassed in the agreement. The District of Columbia Court of Appeals recognizes partial enforcement of non-competition agreements. The court allows overbroad provisions in an agreement to be severable, which enables the rest of the non-competition agreement to be enforced. Non-competition agreements that are overbroad are harmful to a physician’s career because it has the potential to prevent the former employee from earning a living in his learned profession.
There is little binding jurisdiction in the District of Columbia that deals with non-competition agreements. In Deutsch, two dentists, Deutsch and Bartsky became partners of a corporation. Later, the two executed an agreement where Bartsky sold his shares to Deutsch in exchange for about $500,000. The agreement also contained a mutual non-competition clause. The agreement stated that if either the seller or the shareholder “leaves the practice of dentistry during the five and one-half year period following the date of [the agreement]… the departing party covenants and agrees that for a period of two years following said departure, he will not, as an individual, stockholder, officer, director, partner, agent, employee, consultant or representative, engage in the practice of dentistry within a radius of five miles from the Leased Premises.” While this agreement was in effect, Bartsky leased an office within the five-mile radius of the leased premises. Deutsch filed a complaint seeking a two-year injunction to prevent Bartsky from practicing dentistry within the radius. The trial court determined that the agreement was unenforceable. The Court of Appeals noted that restrictions can be limited by the type of activity, geographical area, and by time. The Court of Appeals determined that the two year, five mile restraint was not facially invalid because it was limited in time and geographic area. The Court of Appeals also found there was no evidence to support the trial court’s determination that the restriction was unduly burdensome on Bartsky. The Court of Appeals found summary judgment in favor of Bartsky to be improper because the trial court did not engage in the proper balancing of the factors or refer to specific facts to show that the agreement was unenforceable. There was no evidence to show that the restriction would disable Bartsky from earning a living as a dentist.
Employers practicing in a field of medicine must be certain that their non-competition agreements are narrowly drafted to specific activities, geographic areas, and duration of the restriction. The restriction should be drafted to limit the specific activities that would directly compete with the employer’s business. This way, the former employee will still be able to find a job in his learned profession. In order for a non-competition agreement to be found unenforceable, specific factual evidence must be shown that proves that the restriction was unduly burdensome against the former employee.